Senate Bill 120 would require any state agency to accept IOUs or registered warrants for payment.

However, Californians cannot use the IOUs as an excuse to procrastinate paying bills once the budget is signed into law. For example, late-tax penalties could be levied 30 days after the state begins cashing the IOUs.

With the state staring at a projected $15.4 billion budget deficit over the next 14 months, IOUs or registered warrants are a distinct possibility if there is another lingering budget impasse this summer, Anderson has said.

The state must resort to IOUS after it runs short of cash during lengthy budget battles that extend long past the start of the fiscal year, July 1.